The San Francisco Bay Area is, of course, a Mecca of American left liberalism. But unnoticed throughout the rest of the nation, it is also nurturing ground for free-market intellectuals and home to two major institutions for free-market economic and political thought, the Hoover Institution and the Pacific Research Institute.

On Friday night former presidential candidate, flat tax advocate, author, magazine publisher, and now Internet entrepreneur Steve Forbes addressed the annual dinner of the Pacific Research Institute (which I chair).

In the heart of House Speaker Nancy Pelosi’s congressional district, Forbes spoke to the kind of excited, applauding crowd that normally gathers only in campaign season. If you haven’t seen him at a podium lately, this was a different man from the wooden nerd of the 1996 and 2000 presidential primary trails. He was witty, wry, animated, even, I hesitate to say this, fiery. He scorned the economic thinking of the Obama administration and was hardly more complimentary of the financial-crisis performance of the Bush Administration during its last year.

And he pushed national discussion on the president’s health overhaul plans a step beyond where it has so far been. He urged rejection of a “Brezhnev Doctrine” for the social democratic upheaval that the Speaker and President have embraced.

If either a forthright or masked government seizure of the health markets becomes law, he said, conservatives should not accept it — “Brezhnev Doctrine”-style-as a permanent thing. In the 1980s, he recalled, Thatcher rolled back supposedly invincible union domination of the British economy. And Reagan ended with victory the supposedly permanent Cold War with the Soviets. If the current plan passes, we can and should make the 2010 mid-term elections a referendum on overturning it.

And we can win, he said. Forbes cited polls that show the public doesn’t want the plan any more than it wanted similarly modeled catastrophic care for the elderly that Congress adopted in the late 1980s and repealed a year later. Following enactment of that program, angry crowds of senior citizens chased then Ways and Means chair Dan Rostenkowski down the streets of Chicago. They were enraged at the cost and limits the plan imposed on them. We are seeing the same opposition arise again, only earlier.

What Forbes did not say was that it is an old rule of politics: you can’t fight something with nothing. This is surely why the Administration and its allies have repeated like a mantra that all their opponents can offer is “no.” It is a smart strategy, if only because the president has a couple of hundred IQ points on the media that has so worshipfully covered him. For if the mainstream media were anything but brain dead, the ploy would have crashed on launching.

They would only need to visit the free market think tanks of the Bay Area to understand alternatives. For nearly two decades the Bay Area has been a center of creative and insightful thinking on health reform. Take just a couple of examples:

PRI itself and its president, economist Sally Pipes: A Canadian by birth, Pipes was the first to raise the alarm that the Canadian and British single payer systems have been failures. Long waiting times, limits on operations, medical devises and pharmaceuticals available: these are the legacies of social democratic-style care. She has been a pioneer in examining the airy assertions of nirvana in single payer countries, uncovering one Hades in a single-payer paradise after another.

Pipes has also been a leader in developing alternatives. As she put it in her book, The Top Ten Myths of American Health Care (for a free download or to purchase the book, click http://tinyurl.com/6rzagq), “If we want to bring costs down and extend coverage to more Americans, we have to open the health care marketplace to competition — by abolishing costly government regulations and reforming the tax code to make insurance more affordable. We can solve the health care problems that plague the United States. But we won’t solve them if we continue to believe the many myths that plague the health care debate.”

Hoover Institution economists John Cogan and Daniel Kessler: In their 2005 now-classic Healthy, Wealthy and Wise (available from Amazon here: http://tinyurl.com/yhk46x8 ), these nationally known economists and experts on the federal budget laid out (together with Glenn Hubbard, dean of Columbia University Business School) a similar plan for reform. Included in their check list: 1) equalizing tax treatment for individuals and companies, so individuals aren’t penalized for buying insurance on their own, 2) ending state mandates that drive up the cost of health insurance (Note: in the current New Jersey gubernatorial campaign, the GOP candidate has embraced this position, NJ being one of the nation’s most mandate shackled states. The incumbent Democrat is pounding him, saying he wants to end mammograms for mothers. All health policies sold in NJ must include mammogram coverage, no matter who is covered. So the GOP candidate’s reply should be, “Not for mothers; they’ll keep their choice. I want to end mammograms for fathers, for which we all pay now.”); 3) medical malpractice reform.

San Francisco isn’t the only liberal center for real health reform. Harvard is another, and specifically the Harvard Business School, where the leading researcher and thinker on health policy is Regina Herzlinger. (Herzlinger has just collected many of her op-eds and articles on the issue on a website, launched, nearly as I can tell, in the past week, www.reginaherzlinger.org <http://www.reginaherzlinger.org ).

These and like-minded scholars share a common insight: The root of the health cost inflation driving this issue in Washington is a lack of productivity improvements comparable to those in the rest of the economy. The reasons that productivity lags all come back to government policies — taxes, spending and regulation — that have stifled improvements. Without market pressures that come when individuals controlling their health spending and the creativity that comes when entrepreneurs are free to experiment, productivity improvements cannot happen. The only alternative will be more taxes and rationing, a truth Congress is facing but trying to deny now.

As Hugh Hewitt has noted elsewhere in this blog, vocal proponents of the president’s plan (including, to judge from his vague and frequently error-filled comments, the president himself) too often do not to grasp details of overhaul programs on the table or of their most elementary economic implications. All they want is a political victory.

They may not get that victory. But if they do, after they go home with their legislative trophy, the rest of us will have to live with what they have wrought. How odd that the liberal San Francisco Bay Area (not to mention the Harvard Business School) will be a prime place to look true guidance on how to clean up their mess.